Looming demise of gas guzzling SUVs?

I recently sold my car, a 2001 Mazda Protege LX 2.0, which was loads of fun to drive and averaged 25 MPG on the highway. It wasn't the best fuel efficient in its category, from the time I got it in April 2004 until my last fill up my tab slowly crept up from low $20s to almost $30. With gas prices soaring, I couldn't be any more relieved I don't have to fill up now.

I've always held some contempt for SUVs, more so for their lack of fuel efficiency and for their largess. I do admire car based SUVs like the Highlander and CRV since they handle better and are better with gas. I am no energy expert, well an expert at nothing really, but it seems that gas prices won't be coming down below $3.00 for a while and it will eat in into people's wallets. In the short term, some folks might tough it out expecting that prices will come down shortly after the mess left by Katrina stabilizes. But if prices remain at current levels or only drop a few cents, in the long term large SUV's drivers might not be able to afford pumping gas into their gas guzzlers. This is what economists call price elasticity of demand and for many commuters out there who have to drive to get to work, they have no choice but to fill up at these outrageous prices in the short term. In the long term though, people tend to make choices that will limit their exposure to higher prices. In this case carpooling seems more attractive and so does a Prius with its 50MPG as well as mass transit.

Thankfully there are many cars and even SUV's with better fuel efficiency, even hybrids that consumers can turn to while ditching their gas guzzling SUV's. Some analysts contend that until gas prices normalize around $4 a gallon we won't see large SUV's owners ditching them en masse. Given the long development cycle of vehicles, it might be a longer while until we see a really dramatic improvement on fuel efficiency in the part of SUV's.

There are many factors to explain how we got here ranging from cheap gas in the late 90's to government regulation, but the fact remains there are lots of people out there today feeling the tight squeeze from the very vehicles they bought in the quest of adventure, freedom of terrain or simply keeping up with the Jones. That is to say, while remaining optimistic, no single act by government and auto makers today will ease the pain at the pump overnight, but auto makers can commit to fast tracking the development of better fuel efficient SUVs and the government can increase its fuel efficiency requirements for SUV's bringing them closer to that of cars.

For now, I'll ride the train and limit my fuel exposure by paying only a fuel surcharge when I get a package delivered by FedEx or UPS. :-)

Al